Finding Text
Assistance Listing, Federal Agency, and Program Name - 93.224, U.S. Department of Health and Human Services, Health Center Program, COVID-19 Health Center Program; 93.527, U.S. Department of Health and Human Services, COVID-19 Grants to New and Expanded Services Under the Health Center Program Federal Award Identification Number and Year - H80CS24134, 2020; H8FCS40356, 2021; H8GCS48255, 2022 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2022-008 Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In accordance with notice of awards and the Uniform Data System Health Center Data Reporting Requirements, the health center is required to submit an annual performance report that includes data that reflects all activities in the HRSA health center project. The Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services requires the grantee to submit Federal financial reports with a complete and accurate reporting of cash received, disbursed, total funds authorized, the Federal share expended, and program income earned under the program for period reported. Condition - A lack of effectively designed and implemented internal controls over the accounting records resulted in material entries identified and recorded during the 2023 financial statement audit of the Organization. Additionally, as the result of a lack of effectively designed and implemented controls over financial and performance reporting for the Health Center Program cluster grants, inaccurate performance data and Federal share of expenditures were submitted to HRSA. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - In gaining an understanding of management's processes and controls over financial and performance reporting, there was no evidence of a review to ensure required financial reports were prepared in accordance with the applicable accounting basis and supported by underlying records. In addition, there was no evidence of a review to ensure performance data was accumulated and summarized in accordance with the required methodology and agreed to underlying records. Cause and Effect - The Organization did not have controls in place to ensure that the preparation of account reconciliation occurred appropriately in a timely manner (see Finding 2023-001 for entries identified). In addition, subsequent to starting our audit procedures, the Organization provided us with a significant amount of adjusting journal entries. The entries provided by the Organization subsequent to the commencement of the audit impacted several balance sheet accounts impact to decrease the change in net assets without donor restrictions as summarized in finding 2023-001. As a result, the reports filed with HRSA were materially incorrect, and therefore the Organization did not comply with performance reporting requirements. Additionally, within the two Federal Financial Reports (FFRs) tested, we noted that the Federal share of expenditures reflected Federal cash reimbursement received rather than expenditures incurred during the period under audit. As a result one financial report was understated by approximately $3,070,000 and the other financial report was overstated by approximately $50,000. Recommendation - We recommend that controls be put in place to prepare and review accurate reconciliation with supporting information over all accounting cycles in a timely fashion. Views of Responsible Officials and Planned Corrective Actions - Management agrees with the finding and is evaluating options to implement a timely reconciliation process.